EXPLANATORY STATEMENT
FAMILY LAW (SUPERANNUATION) (METHODS AND FACTORS FOR VALUING PARTICULAR SUPERANNUATION INTERESTS) AMENDMENT APPROVAL 2005 (No. 6)
ISSUED BY THE AUTHORITY OF THE ATTORNEY-GENERAL
In this instrument a method is approved, for the purpose of the provisions of the Family Law Act 1975 (the Act) allowing superannuation to be split on marriage breakdown, for determining the gross value of superannuation interests that employees of Woolworths Limited have in the Woolworths Group Superannuation Scheme (the Scheme).
The gross value is one element in the determination of an amount which is taken to be the value of a superannuation interest in property settlement proceedings under the Act.
Default methods, applying in the absence of a method approved for a particular superannuation scheme, are contained, in the Family Law (Superannuation) Regulations 2001 (the Regulations), for determining the gross value of superannuation interests.
Lump sum benefits payable under the Scheme to former Woolworths Limited employees consist of the employer and member contributions made in respect of the particular employee and, where the employee retires at or after age 55, an additional benefit being an extra percentage of the total of amounts periodically credited by Woolworths Limited to a company account for that employee.
The additional benefit is not payable on death or on ceasing employment with the company.
The extra percentage paid to former employees who retire at or after age 55 varies with the former employee’s age and the length of time, on retirement, he or she had been a member of the Scheme.
It is generally 3% for each year, in excess of 14 years, that the former employee was a member of the Scheme, subject to the maximum additional percentage being 15%.
For former manager employees, the extra percentage payable is 4% for each year, in excess of 14 years, that the former manager employee was a member of the Scheme, subject to the maximum additional percentage being 20%.
Interests in the Scheme are partially vested accumulation interests for the purpose of the Regulations.
The default method, applying in the absence of a method approved for partially vested accumulation interests in a superannuation scheme, contained in the Regulations, assumes an even rate of accrual over a given vesting period.
While the benefits (other than the additional benefit payable on retirement) vest on contribution by Woolworths Limited or the employee to the Scheme, the additional benefit vests only, for employees who are members of the Scheme with 14 years or more of such membership, from age 55.
For employees with less than maximum entitlement to the additional benefit at age 55, there is additional vesting with each year that he or she remains a member of the Scheme until that maximum entitlement is attained.
The method that has been approved values interests that Woolworths Limited employees have in the Scheme as the sum of the employer and member contributions, and the accrued value, at the time of valuation, of the additional benefit that is payable on retirement at or after age 55.
The accrued value is the product of the value of the additional benefit that is payable and a factor which reflects the age and period of service of the employee with Woolworths Limited, and the assumptions on exit from employment with the company made in the most recent actuarial review of the Scheme.
In any case, the particular factor will depend on the employee’s age and the number of complete years of service with Woolworths Limited. Under the method, an employee’s age is taken to be his or her age at the nearest birthday to the date at which the interest is being valued, and his or her period of service with the company is measured in complete years at the service anniversary closest to that valuation date. In a leap year, it is possible that that date could be exactly in the middle of two birthdays or service anniversaries. In those circumstances, the factor relating to the younger age or shorter period of service is used.
The instrument incorporates by reference the Rules in the Schedule to the Trust Deed dated 12 March 1970 establishing the Woolworths Group Superannuation Scheme, as amended.
The Rules provide for the benefits and entitlements members of the Woolworths Group Superannuation Scheme. A copy of the Rules may be obtained from Woolworths Limited at, until Friday 30 September 2005, Level 5, 540 George Street, Sydney NSW 2000 (Telephone: 02 9323 1542). From Tuesday 4 October 2005, a copy of the Rules may be obtained from Woolworths Limited at 1 Woolworths Way, Bella Vista NSW 2153 (Telephone: 02 8885 1080).
Consultation on the content of the instrument was undertaken under section 17 of the Legislative Instruments Act 2003 with the Australian Government Actuary, Woolworths Group Superannuation Scheme Pty Limited (the trustee of the Scheme), Mercer Human Resource Consulting (the actuaries for the Scheme) and the Family Law Section of the Law Council of Australia, by way of exchange of correspondence and discussions.